Q&As

What tax issues should be considered when transferring a non-UK company to a UK company in a share for share exchange?

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Published on LexisPSL on 27/03/2017

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • What tax issues should be considered when transferring a non-UK company to a UK company in a share for share exchange?

What tax issues should be considered when transferring a non-UK company to a UK company in a share for share exchange?

Where a non-UK company is transferred to a UK incorporated and tax-resident company by way of a share for share exchange, there are numerous potential tax implications to consider. The tax implications for the companies and its shareholders in respect of a share for share exchange involving two UK tax resident companies is considered in Practice Note: Share for share exchanges and qualifying corporate bonds (QCBs), and the anti-avoidance rules are outlined in Practice Note: Share for share exchanges and schemes of reconstruction—anti-avoidance rules.

In a share for share exchange involving the transfer of shares in a company incorporated and tax resident outside the UK, the tax rules in that non-UK jurisdiction also need to be considered. Considerations include:

  1. achieving a tax-neutral exchange which, to the extent that it is a share exchange, does not trigger tax charges for the selling shareholder(s) of the non-UK company—each shareholder should also consider this point from the perspective of its jurisdiction of tax residence

  2. ascertaining the UK tax resident company’s base cost in the non-UK company—this depends on whether the exchange is between two independent third parties or it is part of an intra-group transfer or is otherwise not carried out at arm’s length

  3. whether any shareholders of

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